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FinecoBank — Investor Presentation 2018
Jul 31, 2018
4321_ir_2018-07-31_f60045ba-f652-4b63-b03f-cf3f0430e1d3.pdf
Investor Presentation
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2Q18 Results
Milan, July 31st 2018 Alessandro Foti, CEO and General Manager
Disclaimer
- This Presentation may contain written and oral "forward-looking statements", which includes all statements that do not relate solely to historical or current facts and which are therefore inherently uncertain. All forward-looking statements rely on a number of assumptions, expectations, projections and provisional data concerning future events and are subject to a number of uncertainties and other factors, many of which are outside the control of FinecoBank S.p.A. (the "Company"). There are a variety of factors that may cause actual results and performance to be materially different from the explicit or implicit contents of any forward-looking statements and thus, such forward-looking statements are not a reliable indicator of future performance. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. The information and opinions contained in this Presentation are provided as at the date hereof and are subject to change without notice. Neither this Presentation nor any part of it nor the fact of its distribution may form the basis of, or be relied on or in connection with, any contract or investment decision.
- The information, statements and opinions contained in this Presentation are for information purposes only and do not constitute a public offer under any applicable legislation or an offer to sell or solicitation of an offer to purchase or subscribe for securities or financial instruments or any advice or recommendation with respect to such securities or other financial instruments. None of the securities referred to herein have been, or will be, registered under the U.S. Securities Act of 1933, as amended, or the securities laws of any state or other jurisdiction of the United States or in Australia, Canada or Japan or any other jurisdiction where such an offer or solicitation would be unlawful (the "Other Countries"), and there will be no public offer of any such securities in the United States. This Presentation does not constitute or form a part of any offer or solicitation to purchase or subscribe for securities in the United States or the Other Countries.
- Pursuant the consolidated law on financial intermediation of 24 February 1998 (article 154-bis, paragraph 2) Lorena Pelliciari, in her capacity as manager responsible for the preparation of the Company's financial reports declares that the accounting information contained in this Presentation reflects FinecoBank's documented results, financial accounts and accounting records.
- Neither the Company nor any of its representatives, directors or employees accept any liability whatsoever in connection with this Presentation or any of its contents or in relation to any loss arising from its use or from any reliance placed upon it.
Agenda
Focus on product areas
Key messages and Initiatives monitoring
Executive Summary
- 1H18 net profit at 125.2mln, strongly up y/y (+20.1%) confirming the sustainability of a business model able to delivery consistent results in every market condition.
- 2Q18 net profit at 66.2mln (+12.3% q/q, +25.9% y/y)
- 1H18 growing revenues (+10.3% y/y) with a positive contribution by all the business areas: Investing +9.4% y/y (management fees up 12.2% y/y), Banking +11.7% y/y thanks to high quality volume growth in deposits and lending and Brokerage Core Revenues +5.7% y/y
- 1H18 Operating Costs well under control at 124.6mln (+2.9% y/y) and C/I ratio down 2.9p.p. y/y, confirming operating leverage as a key strength of the bank
- Strong and safe capital position: CET1 ratio transitional at 20.7% and TCR transitional at 29.3%
- 1H18 confirms a solid and sustainable commercial activity with strong net sales, assets and clients:
- Net sales at 3.6bn (+24.3% y/y)
- Total Financial Assets at 69.8bn (+9.7% y/y)
- Guided Products & Services penetration rate on AuM stock up to 64% (+5.1 p.p. y/y)
- Over 1,240mln clients (+6.8% y/y)
Results
1H18 net profit above 125mln, +20% y/y boosted by a strong and well diversified revenue growth. C/I ratio at 40%, down ~3 p.p. y/y
Net interest income (1/2)
Remarkable net interest income dynamic (+8.1% y/y) in a negative rate environment. Relentless increase in the lending activity contribution
(1) Financial investments include interest income coming from the reinvestments of deposits (both sight and term) in: Government bonds, UC bonds and Other Financial Investments (repos and immediate available liquidity)
(2) Other net interest income includes Security Lending, Leverage and other (mainly marketing costs), other interest-earning assets include Security Lending and Leverage. See page 33 for details.
(3) Lending: only interest income
(4) Gross margins: interest income related to financial investments, lending, leverage, security lending on interest-earning assets. We refined the calculation of gross margins with managerial data for a better representation 6
Net interest income (2/2)
New investment policy with higher diversification confirmed. Sensitivity analysis +100bps parallel shift: +115 mln
Commissions and Trading Income
Double digit growth in fees and commissions with Management fees up 12.2% y/y. Sound performance of brokerage, both fees and trading income
Costs
Cost efficiency and operating leverage confirmed in our DNA
Staff expenses and FTE Long Term Incentive Plans
(1) Breakdown between development and running costs: managerial data
Other administrative expenses(1) Write-down/backs and depreciation
Capital Ratios
Best in class capital position and low risk balance sheet. Look-through implementation drove +194bps benefit on CET1 ratio
TFA
Relentless TFA growth thanks to a healthy expansion in net sales. Guided products & Services increased at 64% of total AuM
TFA breakdown
Successful shift towards high added value products thanks to strong productivity of the network
Net sales breakdown
Solid Net sales growth in 2018 on the wave of structural trends in place: increasing digitalization and request of advisory services by clients
Plus services
Organic growth
Net sales organically generated confirmed as key in our strategy of growth
of PFAs recruited in the period
Agenda
Fineco Results
Focus on product areas
Key messages and Initiatives monitoring
15
Revenues by Product Area
Well diversified stream of revenues allow the bank to successfully face any market environment
Managerial Data. Revenues attributable to single each product area, generated by products / services offered to customers according to the link between products and product area. Banking includes revenues generated by direct deposits and credit products. Investing includes revenues generated by asset under management products; Brokerage includes revenues from trading activity.
Banking
Sound performance driven by strong volume growth and relentless customer acquisition, thanks to high quality services and customer satisfaction
Managerial Data
Brokerage
Outstanding brokerage results confirming the strong potential of this business
Revenues vs volatility(1)
Managerial Data
- Revenues ranked as second best semester since 2013, the highest considering this level of volatility
- Structural improvement thanks to larger base of clients/higher market share and the enlargement of the products offer
- Continuously increasing market share (i.e. market share on equity traded volumes in Italy at 24% as of June 2018(2) , +4.4p.p. vs Dec.17 confirming Fineco as leader in brokerage)
(1) Volatility calculated as average volatily of FTSEMIB, DAX, SP500, weighted on related executed orders by our clients. Revenues calculated as
brokerage gross core revenues (NII excluded) 18
(2) Assosim
Investing
Successful strategy on cyborg advisory approach drove a better asset mix and increasing fees y/y
Guided products on total AuM
Managerial Data
(1) Mainly PFAs annual bonus and new 2018-2020 LTI to PFAs starting from 1Q18
19 AuC and Deposits under advisory have been reclassified within AuM in order to have a better representation of the advisory nature of Advice and Plus services
Agenda
Fineco Results
Focus on product areas
Key messages and Initiatives monitoring
3 Pillars: Efficiency, Innovation and Transparency The keys of our strategy, still leading our sustainable growth
Strong focus on IT & Operations, more flexibility, less costs
EFFICIENCY INNOVATION TRANSPARENCY Anticipate new needs simplifying customers' life
We built everything from scratch
Freedom: Freedom to start over «from scratch», build a new bank, the best you can imagine Proprietary back-end: In-house development and automated processes allow an efficient cost structure and fast time to market
Excellent offer: Unique customer user experience, top quality in all services
We were true pioneers
Fineco anticipated a main market trend: digitalization Moving customer's focus from proximity to service and quality
We believe in a "Quality" One Stop Solution
Providing all services in a single account is a distinctive feature but it's not enough. Gaining a competitive edge requires high quality on each single service and product
In 2018 Standard Ethics(1) confirmed our Standard Ethics Rating(2) at "EE", a "full investment grade" given to sustainable companies with low reputational risk profile and strong prospects for long-term growth
(1) Standard Ethics is an independent agency which assigns Solicited Sustainability Ratings to companies and sovereign issuers. Fineco is included in the Standard Ethics Italian Banks Index© and in the Standard Ethics Italian Index, among the major environmental, social and governance performance indices and benchmarks.
(2) The Standard Ethics Rating is an assessment of sustainability and governance based on the principles and voluntary directions of the United Nations, the Organization for Economic Cooperation and Development (OECD) and the European Union.
Key messages
Healthy growth and sustainability at the heart of Fineco's business model
- Clients' acquisition leveraging on high quality services. Cost of funding close to zero
- Organic growth as main engine of growth. Selected recruits to improve the quality and related costs well under control
- High quality Lending with low cost of risk, strong competitive advantage leveraging on Big Data analytics
Delivery of consistent results in every market condition
- Growing revenues thanks to a very well diversified business model with smooth quarterly path
- Sound Brokerage results confirming the potential of this business
- Costs under control on the wave of a huge operating leverage, strong IT internal culture
- In case of prolongued market volatility we expect: a solid net sales growth (supported also by structural trends
in Italy), a possible slowdown in the asset mix transformation (with clients more skewed into liquidity and AuC or into more conservative products) and a strong Brokerage performance
Operating Leverage A distinctive competitive advantage of Fineco
| IT and back office internally managed, deep internal know-how |
|||||||
|---|---|---|---|---|---|---|---|
| 18% FTEs in IT department, 25% in Back-Office |
|||||||
| Platform scalability | Core system internally managed |
||||||
| Internal DWH to fully leverage on Big Data Analytics |
|||||||
| and | Very low CAPEX (~10-12mln per year) |
||||||
| Operating gearing | Continuous innovation (new apps /features, products/services, initiatives) fully in house developed: higher flexibility, better time to market and lower costs |
||||||
| Internal development and implementation of regulatory processes and systems (i.e. Mifid 2) to maintain costs well under control |
(2) Net of gain on Visa sale (2016: +15.3mln gross)
Boost in high quality lending volume offered exclusively to the existing base of clients, leveraging on our internal Big Data analytics
(1) Current accounts/overdraft Include Lombard loans
(2) Other loans include current receivables associated with the provisions of financial services (101mln in Jun.18 vs 85mln in Mar.18 and 85mln in Dec.17), collateral deposits and initial and variation margins (79mln in Jun.18 vs 36mln in Mar.18 and 43mln in Dec.17), bad loans (1.6mln in Jun.18 vs 1.7mln in Mar.18 and 1.6mln in Dec.17), other (-2mln in Jun.18 vs -3mln in Mar.18 and +3mln in Dec.17)
24
Initiatives monitoring - Banking Area
Boost in high quality lending volume through mortgages, personal loans and lombard loans
(1) Yield on mortgages net of amortized and hedging costs
(2) Credit Lombard allows to change pledged assets without closing and re-opening the credit line, allowing more flexibility and efficiency
(3) with floor at zero
25
Initiatives monitoring - Investing Area
Increase network's productivity and Private Banking
Private Banking Total Financial Assets
- Private Banking area is experiencing a huge growth both in terms of assets and clients. Through Private Banking we want to create a deeper relationship with the client, combining advanced technology with the unique professional skills of our advisors to achieve client's life goals
- Tailor-made solutions, portfolio analysis and monitoring, investment advisory, fund research and selection
Fineco Asset Management (1/2)
- Savings from Core Series internalization
- Lower cost of mandate for sub-advised funds compared with current distribution fees
- Ireland main hub for asset management allowing us to outsource some operational activities in a very efficient way
- Additional efficiencies (establishment costs, marketing costs, fund administration costs)
Fineco Asset Management (2/2)
- FAM will be able to generate several efficiencies leveraging on a vertically integrated business model combined with the strong operating efficiency which is in Fineco's DNA
- Win-win solution for the clients and the Bank: lower TER for clients, higher margins
- For this reason, the potential in terms of volumes is huge thanks both to new inflows and existing stock transformation. We will leverage on:
- a progressive improvement in the asset mix
- several initiatives to channel a relevant portion of AUM in FAM (i.e. all innovative solutions will be manufactured in Ireland)
UNDERLYING ASSUMPTIONS:
Revenue split: 60% Italy, 40% FAM (Ireland) only Retail class (this assumption will be confirmed by bilateral tax ruling between Italy and Ireland). Institutional Class 100% Ireland
Further opportunities
- Unique positioning in a highly fragmented market, leveraging on our one-stop solution. Among the most competitive players on Multicurrency account, securities and CFDs
- Dedicated marketing activities on the territory (value proposition / selling points and education on brokerage)
Patent Box We applied in 2015 for intellectual properties (our platforms internally created and developed) and trademark We are currently in talks with Italian Fiscal Authority, which is quantifying the relevant income Fiscal benefits are for 5 years: 2015, 2016, 2017, 2018 and 2019 as the regime is characterized by a five year lock-in period. Intellectual proprieties are renewable according to international guidelines
Annex
| mln | 1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17 | 1Q18 | 2Q18 | 1H17 | 1H18 |
|---|---|---|---|---|---|---|---|---|---|
| Net interest income | 63.0 | 64.3 | 67.4 | 70.1 | 264.8 | 68.9 | 68.7 | 127.3 | 137.6 |
| Net commissions | 64.7 | 65.0 | 69.7 | 70.7 | 270.1 | 71.5 | 74.5 | 129.7 | 146.0 |
| Trading profit | 13.7 | 12.3 | 11.1 | 11.1 | 48.2 | 14.5 | 13.1 | 26.0 | 27.6 |
| Other expenses/income | 0.5 | -0.8 | 0.1 | 3.9 | 3.8 | 0.5 | 0.1 | -0.2 | 0.6 |
| Total revenues | 141.9 | 140.9 | 148.3 | 155.8 | 586.9 | 155.4 | 156.4 | 282.8 | 311.8 |
| Staff expenses | -19.2 | -19.7 | -19.8 | -20.6 | -79.3 | -20.5 | -21.0 | -38.9 | -41.5 |
| Other admin.exp. net of recoveries | -39.2 | -38.2 | -31.1 | -35.0 | -143.6 | -40.8 | -37.5 | -77.4 | -78.3 |
| D&A | -2.3 | -2.5 | -2.6 | -2.9 | -10.4 | -2.3 | -2.5 | -4.8 | -4.8 |
| Operating expenses | -60.7 | -60.4 | -53.5 | -58.6 | -233.2 | -63.6 | -61.0 | -121.2 | -124.6 |
| Gross operating profit | 81.2 | 80.4 | 94.8 | 97.3 | 353.6 | 91.8 | 95.4 | 161.6 | 187.2 |
| Provisions | -2.4 | -0.8 | -21.0 | 5.2 | -19.0 | -1.8 | -1.9 | -3.1 | -3.7 |
| LLP | -0.6 | -1.1 | -1.6 | -2.1 | -5.4 | -1.3 | 0.2 | -1.7 | -1.2 |
| Integration costs | 0.0 | 0.0 | 0.0 | 0.4 | 0.4 | 0.0 | 0.0 | 0.0 | 0.0 |
| Profit from investments | 0.0 | -0.4 | -1.4 | -11.6 | -13.4 | 0.0 | 5.2 | -0.4 | 5.2 |
| Profit before taxes | 78.2 | 78.2 | 70.7 | 89.1 | 316.3 | 88.7 | 98.8 | 156.5 | 187.5 |
| Income taxes | -26.5 | -25.7 | -23.9 | -26.0 | -102.1 | -29.7 | -32.6 | -52.2 | -62.3 |
| Net profit for the period | 51.7 | 52.6 | 46.8 | 63.1 | 214.1 | 59.0 | 66.2 | 104.3 | 125.2 |
| Normalised Net Income(1) | 51.7 | 52.6 | 52.7 | 61.6 | 218.5 | 59.0 | 66.2 | 104.3 | 125.2 |
| Non recurring items (mln, gross) | 1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17 | 1Q18 | 2Q18 | 1H17 | 1H18 |
|---|---|---|---|---|---|---|---|---|---|
| (2) Extraord systemic charges (Provisions) |
0.0 | 0.0 | -7.4 | 7.4 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 |
| (3) Extraord systemic charges (Profit from investm) |
0.0 | 0.0 | -1.4 | -11.5 | -12.9 | 0.0 | 0.0 | 0.0 | 0.0 |
| Integration costs | 0.0 | 0.0 | 0.0 | 0.4 | 0.4 | 0.0 | 0.0 | 0.0 | 0.0 |
| Release of taxes | 0.0 | 0.0 | 0.0 | 3.9 | 3.9 | 0.0 | 0.0 | 0.0 | 0.0 |
| Total | 0.0 | 0.0 | -8.8 | 0.3 | -8.5 | 0.0 | 0.0 | 0.0 | 0.0 |
(1) Net of non recurring items
31
(2) 3Q17 write-down related to the residual commitment to the Voluntary Scheme moved to Profit from Investment in 4Q17 following the payment.
2Q18 Gross Operating Profit – Net profit: walk
Following the introduction of IFRS 9, new specific models which draw on the PD, LGD and EAD criteria, as well as the effective interest rate, to calculate the expected loss have been implemented. In this regard, forward-looking information has also been included with the elaboration of specific scenarios. These models are used for calculating value adjustments of all the institutional counterparties, including financial institutions, banks and sovereign counterparties.
In 2Q18 Loan Loss Provisions and Profit on Investments benefitted from model recalibration for loans to banks and in particular from the improvement of UniCredit risk profile (PD). This generated:
- +2.4mln Loan Loss Provisions mainly related to current account with UC
- +5.3mln Profit on Investments, o/w +5.5mln related to UC bond portfolio
Details on Net Interest Income
| mln | 1Q17 | Volumes & Margins |
2Q17 | Volumes & Margins |
3Q17 | Volumes & Margins |
4Q17 | Volumes & Margins |
FY17 | Volumes & Margins |
1Q18 | Volumes & Margins |
2Q18 | Volumes & Margins |
1H17 | Volumes & Margins |
1H18 | Volumes & Margins |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Financial Investments | 55.4 | 17,530 | 55.6 | 17,864 | 57.2 | 18,086 | 58.2 | 18,127 | 226.5 | 17,902 | 56.9 | 18,449 | 57.5 | 18,887 | 111.0 | 17,697 | 114.4 | 18,668 |
| Net Margin | 1.28% | 1.25% | 1.26% | 1.27% | 1.26% | 1.25% | 1.22% | 1.26% | 1.24% | |||||||||
| Gross margin |
56.3 | 1.30% | 56.7 | 1.27% | 58.5 | 1.28% | 59.6 | 1.30% | 231.1 | 1.29% | 58.6 | 1.29% | 59.7 | 1.27% | 113.0 | 1.29% | 118.3 | 1.28% |
| Security Lending |
0.7 | 938 | 0.6 | 831 | 0.5 | 764 | 0.3 | 804 | 2.0 | 834 | 0.2 | 804 | 0.2 | 726 | 1.3 | 884.3 | 0.4 | 764.5 |
| Net Margin | 0.30% | 0.30% | 0.24% | 0.13% | 0.24% | 0.11% | 0.10% | 0.30% | 0.11% | |||||||||
| Leverage - Long | 1.9 | 130 | 2.2 | 152 | 2.6 | 173 | 3.0 | 201 | 9.6 | 164 | 2.7 | 182 | 2.7 | 181 | 4.0 | 140.9 | 5.5 | 181.9 |
| Net Margin | 5.79% | 5.76% | 5.91% | 5.94% | 5.87% | 6.06% | 6.03% | 5.77% | 6.05% | |||||||||
| Lendings | 6.6 | 794 | 7.5 | 1,010 | 8.1 | 1,261 | 8.7 | 1,546 | 30.9 | 1,153 | 9.2 | 1,854 | 9.5 | 2,080 | 14.1 | 902.3 | 18.7 | 1,966.8 |
| Net Margin | 3.36% | 2.99% | 2.54% | 2.24% | 2.68% | 2.01% | 1.84% | 3.15% | 1.92% | |||||||||
| o/w Current accounts |
1.7 | 312 | 1.8 | 340 | 1.9 | 410 | 2.2 | 546 | 7.7 | 402 | 2.4 | 684 | 2.6 | 788 | 3.5 | 325.9 | 5.0 | 736.1 |
| Net Margin | 2.20% | 2.13% | 1.89% | 1.63% | 1.92% | 1.43% | 1.33% | 2.17% | 1.38% | |||||||||
| o/w Cards |
1.1 | 207 | 1.1 | 216 | 1.2 | 232 | 1.2 | 227 | 4.7 | 221 | 1.2 | 240 | 1.2 | 232 | 2.3 | 211.8 | 2.4 | 236.0 |
| Net Margin | 2.22% | 2.12% | 2.04% | 2.13% | 2.13% | 2.00% | 2.05% | 2.17% | 2.02% | |||||||||
| o/w Personal loans |
3.7 | 257 | 3.9 | 297 | 4.0 | 317 | 4.1 | 340 | 15.8 | 303 | 4.3 | 370 | 4.4 | 394 | 7.6 | 276.8 | 8.6 | 381.6 |
| Net Margin | 5.81% | 5.34% | 5.05% | 4.81% | 5.22% | 4.67% | 4.45% | 5.56% | 4.55% | |||||||||
| o/w Mortgages |
0.1 | 18 | 0.6 | 158 | 0.9 | 301 | 1.1 | 432 | 2.7 | 227 | 1.3 | 560 | 1.4 | 666 | 0.7 | 87.8 | 2.7 | 613.0 |
| Net Margin | 1.61% | 1.59% | 1.15% | 1.04% | 1.19% | 0.96% | 0.81% | 1.60% | 0.88% | |||||||||
| (1) Other |
-1.5 | -1.6 | -0.9 | -0.1 | -4.2 | -0.1 | -1.1 | -3.2 | -1.3 | |||||||||
| Total | 63.0 | 64.3 | 67.4 | 70.1 | 264.8 | 68.9 | 68.7 | 127.3 | 137.6 | |||||||||
| Gross Margin Cost of Deposits |
1.35% -0.02% |
1.34% -0.02% |
1.35% -0.03% |
1.36% -0.03% |
1.35% -0.02% |
1.33% -0.03% |
1.31% -0.04% |
1.34% -0.02% |
1.32% -0.04% |
Volumes and margins: average of the period Net margin calculated on real interest income and expenses
(1) Other includes mainly marketing costs
UniCredit bonds underwritten
| ISIN | Currency | Amount (€ m) |
Maturity | Indexation | Spread | |
|---|---|---|---|---|---|---|
| 1 | IT0005010290 | Euro | 382 5 |
23-Jul-18 | Euribor 1m |
2.19% |
| 3 | IT0005010357 | Euro | 382 5 |
19-Oct-18 | Euribor 1m |
2.24% |
| 4 | IT0005010373 | Euro | 382 5 |
18-Jan-19 | Euribor 1m |
2.29% |
| 5 | IT0005010613 | Euro | 382 5 |
1-Apr-19 | Euribor 1m |
0.38% |
| 6 | IT0005010282 | Euro | 382 5 |
15-Jul-19 | Euribor 1m |
2.37% |
| 7 | IT0005010399 | Euro | 382 5 |
14-Oct-19 | Euribor 1m |
2.40% |
| 8 | IT0005010324 | Euro | 382 5 |
13-Jan-20 | Euribor 1m |
2.44% |
| 9 | IT0005010365 | Euro | 382 5 |
10-Apr-20 | Euribor 1m |
2.47% |
| 10 | IT0005010308 | Euro | 382 5 |
9-Jul-20 | Euribor 1m |
2.49% |
| 11 | IT0005010381 | Euro | 382 5 |
7-Oct-20 | Euribor 1m |
2.52% |
| 12 | IT0005010332 | Euro | 382 5 |
6-Jan-21 | Euribor 1m |
2.54% |
| 13 | IT0005010316 | Euro | 382 5 |
6-Apr-21 | Euribor 1m |
2.56% |
| 14 | IT0005010340 | Euro | 382 5 |
5-Jul-21 | Euribor 1m |
2.58% |
| 15 | IT0005010225 | Euro | 382 5 |
18-Oct-21 | Euribor 1m |
2.60% |
| 17 | IT0005010860 | USD1 | 42 9 |
7-Apr-20 | USD Libor 1m |
2.66% |
| 18 | IT0005158503 | USD1 | 42 9 |
23-Dec-22 | USD Libor 1m |
1.93% |
| 19 | IT0005040099 | Euro | 100 0 |
24-Jan-22 | Euribor 1m |
1.46% |
| 20 | IT0005057994 | Euro | 200 0 |
11-Apr-22 | Euribor 1m |
1.43% |
| 21 | IT0005083743 | Euro | 300 0 |
28-Jan-22 | Euribor 1m |
1.25% |
| 22 | IT0005106189 | Euro | 230 0 |
20-Apr-20 | Euribor 1m |
0.90% |
| 23 | IT0005114688 | Euro | 180 0 |
19-May-22 | Euribor 1m |
1.19% |
| 24 | IT0005120347 | Euro | 700 0 |
27-Jun-22 | Euribor 1m |
1.58% |
| 25 | IT0005144065 | Euro | 450 0 |
14-Nov-22 | 3m2 Euribor |
1.40% |
| 26 | IT0005144073 | Euro | 350 0 |
15-Nov-21 | 3m2 Euribor |
1.29% |
| 27 | IT0005158412 | Euro | 250 0 |
23-Dec-22 | 3m2 Euribor |
1.47% |
| 28 | IT0005163180 | Euro | 600 0 |
11-Feb-23 | 3m2 Euribor |
1.97% |
| 29 | IT0005175135 | Euro | 100 0 |
24-Mar-23 | 3m2 Euribor |
1.58% |
| 30 | IT0005217606 | Euro | 350 0 |
11-Oct-23 | 3m2 Euribor |
1.65% |
| 31 | IT0005241317 | Euro | 622 5 |
2-Feb-24 | 3m2 Euribor |
1.52% |
| Total | Euro | 9 ,787 5 |
Euribor 1m |
1 95% |
||
| 1 USD |
85 8 |
USD Libor 1m |
2 30% |
|||
| Totale Eur e USD |
9 873 3 , |
1 96% |
Amounts expressed at EUR/USD 1.1658 exchange rate (as of June 29th, 2018)
In order to calculate an average spread on Eur1m, a basis swap of 0.07% is considered
Details on Net Commissions
| mln | 1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17 | 1Q18 | 2Q18 | 1H17 | 1H18 |
|---|---|---|---|---|---|---|---|---|---|
| Brokerage | 20 | 18 | 16 | 18 | 73 | 20 | 20 | 38 | 40 |
| 3 | 3 | 8 | 0 | 3 | 6 | 1 | 5 | 7 | |
| o/w | |||||||||
| Equity | 16 | 15 | 13 | 15 | 60 | 17 | 16 | 31 | 33 |
| 7 | 2 | 5 | 2 | 6 | 5 | 4 | 9 | 9 | |
| Bond | 1 | 0 | 0 | 0 | 3 | 0 | 1 | 1 | 2 |
| 0 | 9 | 7 | 9 | 6 | 8 | 2 | 9 | 0 | |
| Derivatives | 2 | 2 | 1 | 1 | 8 | 2 | 2 | 4 | 5 |
| 4 | 0 | 9 | 9 | 2 | 5 | 7 | 4 | 1 | |
| commissions(1) Other |
0 1 |
0 2 |
0 6 |
0 0 |
0 9 |
-0 1 |
-0 2 |
0 3 |
-0 4 |
| Investing | 43 | 44 | 47 | 48 | 183 | 47 | 49 | 88 | 96 |
| 7 | 6 | 1 | 3 | 7 | 1 | 5 | 3 | 6 | |
| o/w | |||||||||
| fees Placement |
3 1 |
2 9 |
2 3 |
3 2 |
11 5 |
2 5 |
2 4 |
6 0 |
5 0 |
| Management fees |
45 3 |
47 4 |
48 5 |
50 7 |
192 0 |
50 2 |
53 9 |
92 8 |
104 1 |
| PFA's: | -4 | -5 | -3 | -5 | -19 | -4 | 8 | -10 | -10 |
| incentives | 7 | 7 | 7 | 7 | 9 | 8 | -5 | 5 | 6 |
| to | |||||||||
| PFA's: | 0 | 0 | 0 | 0 | 0 | -0 | -1 | 0 | -1 |
| LTI | 0 | 0 | 0 | 0 | 0 | 9 | 1 | 0 | 9 |
| to | |||||||||
| Banking | 0 | 1 | 5 | 4 | 12 | 3 | 4 | 2 | 8 |
| 6 | 9 | 7 | 2 | 4 | 4 | 7 | 6 | 1 | |
| Other | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| 1 | 2 | 2 | 2 | 7 | 3 | 3 | 4 | 6 | |
| Total | 64 | 65 | 69 | 70 | 270 | 71 | 74 | 129 | 146 |
| 7 | 0 | 7 | 7 | 1 | 5 | 5 | 7 | 0 | |
Starting from 2018, incentives to PFAs and 2018-2020 LTI to PFAs have been restated among product areas with an even higher incidence to Investing to better reflect the focus of incentives in the asset mix improvement. 1Q18 has been restated accordingly.
(1) Other commissions include security lending and other PFA commissions related to AuC
Revenue breakdown by Product Area
| mln | 1Q17 | 2Q17 | 3Q17 | 4Q17 | FY17 | 1Q18 | 2Q18 | 1H17 | 1H18 |
|---|---|---|---|---|---|---|---|---|---|
| Net interest income |
62 0 |
63 1 |
65 5 |
67 3 |
258 0 |
67 3 |
68 4 |
125 2 |
135 7 |
| Net commissions |
0 6 |
1 9 |
5 7 |
4 2 |
12 4 |
3 4 |
4 7 |
2 6 |
8 1 |
| Trading profit |
1 9 |
1 7 |
1 2 |
1 3 |
6 2 |
1 4 |
1 5 |
3 6 |
2 8 |
| Other | 0 1 |
0 1 |
0 1 |
0 0 |
0 3 |
0 1 |
0 2 |
0 2 |
0 3 |
| Total Banking |
64 7 |
66 9 |
72 5 |
72 9 |
277 0 |
72 1 |
74 8 |
131 6 |
146 9 |
| Net interest income |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
| Net commissions |
43 7 |
44 6 |
47 1 |
48 3 |
183 7 |
47 1 |
49 5 |
88 3 |
96 6 |
| Trading profit |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
| Other | 0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
| Investing Total |
43 7 |
44 6 |
47 1 |
48 3 |
183 7 |
47 1 |
49 5 |
88 3 |
96 6 |
| Net interest income |
2 8 |
3 2 |
3 4 |
3 7 |
13 1 |
3 2 |
3 2 |
6 0 |
6 4 |
| Net commissions |
20 3 |
18 3 |
16 8 |
18 0 |
73 3 |
20 6 |
20 1 |
38 5 |
40 7 |
| Trading profit |
11 5 |
10 4 |
9 7 |
8 8 |
40 4 |
12 4 |
10 7 |
21 9 |
23 2 |
| Other | 0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
0 0 |
| Total Brokerage |
34 6 |
31 9 |
29 9 |
30 4 |
126 8 |
36 3 |
34 0 |
66 4 |
70 3 |
Managerial Data
Breakdown Total Financial Assets
37
| mln | Mar 17 |
Jun 17 |
Sep 17 |
Dec 17 |
Mar 18 |
Jun 18 |
|---|---|---|---|---|---|---|
| AUM | 30 182 , |
059 31 , |
31 797 , |
563 33 , |
536 33 , |
34 496 , |
| o/w Sicav Funds and |
24 984 , |
25 461 , |
25 901 , |
26 999 , |
26 666 , |
26 809 , |
| o/w Insurance |
4 749 , |
5 145 , |
5 431 , |
6 075 , |
6 395 , |
7 043 , |
| o/w GPM |
9 | 9 | 7 | 7 | 1 | 1 |
| o/w AuC deposits under advisory + |
440 | 444 | 458 | 483 | 475 | 643 |
| o/w in Advice |
440 | 444 | 458 | 483 | 475 | 477 |
| o/w in Plus |
0 | 0 | 0 | 0 | 0 | 166 |
| AUC | 13 461 , |
13 429 , |
13 884 , |
13 681 , |
13 890 , |
14 366 , |
| o/w Equity |
7 698 , |
7 817 , |
8 221 , |
8 378 , |
8 573 , |
8 736 , |
| o/w Bond |
5 695 , |
5 552 , |
5 616 , |
5 284 , |
5 298 , |
5 613 , |
| o/w Other |
68 | 60 | 47 | 20 | 20 | 18 |
| Direct Deposits |
559 18 , |
19 139 , |
19 674 , |
19 941 , |
20 624 , |
20 968 , |
| o/w Sight |
18 504 , |
19 105 , |
19 659 , |
19 931 , |
20 616 , |
20 962 , |
| o/w Term |
55 | 34 | 14 | 10 | 7 | 6 |
| Total | 62 202 , |
63 627 , |
65 355 , |
185 67 , |
050 68 , |
69 830 , |
| o/w Guided Services Products & |
17 470 , |
18 399 , |
19 190 , |
21 227 , |
21 425 , |
22 199 , |
| o/w TFA Private Banking |
23 255 |
23 978 |
25 053 |
25 886 |
26 109 |
26 992 |
| , | , | , | , | , | , | |
AuC and Deposits under advisory have been reclassified within AuM in order to have a better representation of the advisory nature of Advice and Plus services
Balance Sheet
| mln | Mar 17 |
Jun 17 |
Sep 17 |
Dec 17 |
1st Jan 18 |
Mar 18 |
Jun 18 |
|---|---|---|---|---|---|---|---|
| Due from Banks |
15 462 , |
14 827 , |
14 293 , |
13 878 , |
3 036 , |
3 488 , |
3 224 , |
| Customer Loans |
1 166 , |
1 504 , |
1 716 , |
2 129 , |
2 129 , |
2 318 , |
2 633 , |
| Financial Assets |
3 912 , |
4 770 , |
5 429 , |
5 885 , |
16 733 , |
17 106 , |
17 199 , |
| Tangible and Intangible Assets |
112 | 113 | 113 | 113 | 113 | 112 | 112 |
| Derivatives | 12 | 15 | 16 | 10 | 0 | 0 | 3 |
| Other Assets |
262 | 284 | 249 | 326 | 325 | 211 | 254 |
| Total Assets |
20 927 , |
513 21 , |
815 21 , |
22 340 , |
335 22 , |
235 23 , |
425 23 , |
| Customer Deposits |
18 884 , |
19 441 , |
20 008 , |
20 205 , |
20 205 , |
20 916 , |
21 197 , |
| Due Banks to |
980 | 930 | 697 | 926 | 926 | 960 | 908 |
| Derivatives | 17 | 16 | 19 | 9 | 0 | 0 | 2 |
| Funds and other Liabilities |
314 | 506 | 421 | 468 | 476 | 367 | 445 |
| Equity | 732 | 621 | 672 | 732 | 729 | 992 | 874 |
| Liabilities Equity Total and |
20 927 , |
21 513 , |
21 815 , |
22 340 , |
22 335 , |
23 235 , |
23 425 , |
IFRS9: the Bank decided to not disclose comparative data from previous periods, as allowed by new accounting standards.
Total assets: 95% not exposed to volatility
Out of 23.4bn, only 1bn of Assets valuated at fair value with limited impacts on Equity reserve
39 (1) Due from banks include 2.1bn current accounts (immediate available liquidity), 1.0bn term deposits, 0.1mln other (2) Other refers to tangible and intangible assets, derivatives and other assets
High-value deposit base confirms strong resilience over time
- Double-digit deposit growth throughout the last 10 years (+10% CAGR), with no impacts from 2008 financial crisis and 2011 sovereign debt crisis
- Strong resilience during periods of stress/crisis: 912mln worst liquidity outflow on April 10th , 2012
- High-value deposit base: most of our deposits is transactional liquidity. Customer rate: zero; cost of funding: 3bps
- 79% of total sight deposits: core liquidity(1) in a stressed scenario according to clients' behavioral model
- Structural trends in place in Italy combined with best in class banking platform and high-quality services will continue to support our deposit growth
Additional Tier 1
| Details | Benefits | ||
|---|---|---|---|
| |
Given current favorable market on 23rd January, 2018 the Bank AT1 Coupon fixed at 4.82% for the Intra-group private placement, SpA Semi-annual coupon. First rd 3 , 2018 (short first coupon): Net coupon will impact directly taxes per year) |
conditions and spread levels, issued a €200mln perpetual initial 5.5 years fully subscribed by UniCredit Interest Payment Date on June 2.1mln net of taxes Equity reserves (~6.5mln net of |
Sustain a more diversified investment strategy through the non-renewal of UC Bonds run-offs and the progressive increase of European Govies Leverage Ratio evolution in a comfortable zone, even by further diversifying the investment portfolio Several benefits came from intra-group private placement, both in terms of effective costs savings and faster issuance process, allowing the Bank to maximize the benefits of the deal UniCredit and Intesa AT1 yield at first call date |
| Key ratios pro-forma(1) | with AT1 issue | ||
| % | Leverage Ratio |
Total Capital ratio % |
|
| 8.01% | 29.51% | ||
| AT1 impact | AT1 impact | ||
| Leverage ratio 5.67% (stated) |
Total Capital 20.77% Ratio (stated) |
UniCredit AT1 10Sept.21 UniCredit AT1 3Jun.23 UniCredit AT1 3Jun25 |
|
| Fineco Issue Date Intesa AT1 19Jan.21 Intesa AT1 11Jan.27 |
(1) Ratios transitional. Total Capital ratio assuming 2017 dividend of 28.5 € cents per share.
2017
Intesa AT1 11Jan.27
2017
| Mar | Jun | Sep | Dec | Mar | Jun | |
|---|---|---|---|---|---|---|
| 17 | 17 | 17 | 17 | 18 | 18 | |
| PFA TFA/ PFA (mln) (1) |
20 2 |
20 7 |
21 4 |
22 2 |
22 5 |
23 0 |
| / Guided Products TFA (2) |
28% | 29% | 29% | 32% | 31% | 32% |
| Cost / income Ratio (3) |
42 8% |
42 8% |
40 5% |
39 7% |
41 0% |
40 0% |
| CET | 22 | 22 | 20 | 20 | 20 | 20 |
| 1 | 2% | 1% | 7% | 8% | 2% | 7% |
| Ratio | ||||||
| Adjusted | 5% | 39 | 39 | 40 | 35 | 36 |
| RoE | 39 | 3% | 0% | 3% | 1% | 9% |
| (4) | ||||||
| (5) | 89% | 6 | 5 | 5 | 15% | 6 |
| Leverage | 7 | 79% | 95% | 67% | 7 | 51% |
| Ratio |
(1) PFA TFA/PFA: calculated as end of period Total Financial Assets related to the network divided by number of PFAs eop
(2) Calcuated as Guided Products eop divided by Total Financial Assets eop
(3) C/I ratio net of non recurring items (see page 31) calculated as Operating Costs divided by Revenues net of non recurring items
(4) Adjusted RoE: annualized Net Profit, net of non recurring items (see page 31) divided by the average book shareholders' equity for the period (excluding dividends expected to be distributed and the revaluation reserves)
(5) Leverage ratio based on CRR definition, according to the EC Delegated Act 2015/62 regarding the exclusion of intra-group exposure
Fineco Asset Management - FAM (1/2) FAM products and expected efficiencies
| Products | Destination | |
|---|---|---|
| 1 | NEW FAM FUNDS OF FUNDS: | |
| BUILDING BLOCKS (Institutional class) |
insurance wrappers (Core Unit, Advice Unit, etc.) |
|
| BUILDING BLOCKS (Retail class) |
à la carte or in portfolio solutions (Advice, Stars) |
|
| 2 | SUB-ADVICED FUNDS WITH PREFERRED PARTNERS: | |
| SINGLE FUNDS (Institutional class) |
New FAM funds of funds + Core Series |
|
| SINGLE FUNDS (Retail class) |
à la carte, portfolio solutions (Advice, Stars) |
|
| 3 | CORE SERIES |
Efficiency on margins
- Savings coming from Core Series internalization
- Lower cost of mandate (sub-advised funds) compared with current distribution fees
Operational efficiency
- Ireland main hub for asset management allowing us to outsource some operational activities in a very efficient way
- Additional efficiencies (establishment costs, marketing costs, fund administration costs)
- Expected annual Operating Costs: ~5mln
Fineco Asset Management - FAM (2/2)
Potential Upside: relevant and recurring improvement in our profitability
UNDERLYING ASSUMPTIONS:
Revenue split: 60% Italy, 40% FAM (Ireland) only Retail class. Institutional Class 100% Ireland
Dividend payout FAM to Fineco SpA: 100%
Cooperative Compliance Scheme:
FinecoBank admitted in the Cooperative Compliance Scheme with the Revenue Agency
In July 2017, FinecoBank has been admitted to the Cooperative Compliance Scheme(1) , which allows the Bank to take part to a register of taxpayers (published on the Revenue Agency's official website) operating in full transparency with the Italian tax Authorities. This is a fundamental milestone for our Bank
Until now, only 5 companies have been admitted in Italy: Fineco, UniCredit, Leonardo, Ferrero, Prada and BPER (Banca Popolare dell'Emilia Romagna)
Key requirements to be admitted:
- subjective and objective requirements (resident legal entities with specific sizing thresholds)
- effective system in place for identifying, measuring, managing and controlling tax risk in line with the "essential" requirements of the Tax Control Framework envisaged by law, Revenue Agency ordinances and by the OECD documents published on the subject
Several advantages:
- closer relationship of trust and cooperation with the Revenue Agency
- Increase of the level of certainty on significant tax issues under conditions of full transparency
- agreed and preventive risk assessment of situations likely to generate tax risks
- fast track ruling